DEEPAK KUMAR BANSAL versus UNION OF INDIA & ANR.

Citation: [2009] 2 S.C.R. 530 · Decided: 17-02-2009 · Supreme Court of India · Bench: TARUN CHATTERJEE · Disposal: Case Partly allowed
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Judgment (excerpt)

(2009] 2 S. C.R. 530 
A 
DEEPAK KUMAR BANSAL 
v 
,\----. 
UNION OF !NOIA & ANR. 
Civil Appeal No. 1089 of 2009 
B 
FEBRUARY 17, 2009 
[TARUN CHATTERJEE AND V.S. SIRPURKAR, JJ.] 
Arbitration and Conciliation Act, 1996: 
s. 11 (6) - Appointment of arbitrator - Denial of in view of 
ll 
'.. 
Circular limiting arbitration proceedings only to claims which 
c were less than 20% of value of contract- Held: Claim was not 
in excess of 20% of total cost - Thus referable to arbitration 
proceeding - Cost of supplementary work orders issued from 
time to time to be added to the original cost of work for 
determining total cost of work orders. 
D 
Original contract entered in 1996 - Circular issued in 
2003 intimating intention to incorporate a clause - Applicability 
~ 
of the circular - Held: Not applicable as the said Circular came 
~ 
into force only from 2003 and not before that, in the absence 
of any subsequent insertion of that Clause in the original 
E 
contract - Accordingly, question of applicability of the said 
Circular could not arise at all. 
An agreement was executed between the parties 
which contained arbitration clause. In terms thereof, work 
"\ 
order was issued to the appellant on 22.9.1996. The 
estimated cost of work was Rs.32.75 lacs. Since the 
+ 
F 
quantity of work was much more than the work order 
issued, supplementary work orders were issued from time 
to time for Rs.4.99 lacs, Rs.3.26 lacs, Rs.2.17 lacs, Rs.2.17 
lacs. The total work orders for the cost of Rs.42.60 were 
issued to the appellant. Some dispute arose between the 
G parties and appellant invoked arbitration clause. High 
Court dismissed the application for appointment of an 
... ~ 
arbitrator under s.11 (6) of the Arbitration and Conciliation 
~ 
Act, 1996 on the ground that since the value of the claim 
was more than 20% of the value of the work, the disputes 
H 
530 
t 
DEEPAK KUMAR BANSAL V UNION OF INDIA & ANR. 
531 
could not be referred to Arbitrator in view of the Circular A 
dated 11.6.2003 issued by the respondent intimating their 
intention to incorporate Clause 18 in the General 
Conditions of Contract limiting arbitration proceedings to 
only such claims, which were less than 20% of the value 
of the contract. Hence the instant appeal. 
B 
Partly allowing the appeal, the Court 
HELD: 1. The High Court mis-directed itself in holding 
that the claim was in excess of 20% of the total cost of the 
work. Admittedly, the work was for a sum of Rs.32.17 lacs c 
(original) and three additions viz. Rs.4.99 lacs, Rs.3.25 lacs 
and Rs.2.17 lacs totalling Rs. 42.60 lacs, which cannot be 
in excess of 20% of the total cost of the work. The High 
Court has only considered the original work order that 
was Rs.32.17 lacs, which must be taken into account along 0 
with three supplementary work orders. Even assuming 
that the claim was in excess of 20% of the total cost of the 
work, even then, the Circular, which came into effect from 
11.06.2003 would not be applicable in the case of the 
appellant. There cannot be any dispute that the Circular 
intimating Clause 18 and issued on 11.06.2003 could not E 
. be applied in the case of the appellant as the said Circular 
came into force only from that date i.e. 11.06.2003 and not 
before that, in the absence of any subsequent insertion 
of that Clause in the original contract, namely, Clause 64 
of the General Conditions of Contract. Accordingly, F 
question of applicability of the said Circular intimating 
intention of the respondent to insert Clause 18 could not 
arjse at all. [Paras 9-11] [935-F, G, H; 936-A, B] 
State of AP & Another v. Obu/u Reddy ( 1999) 9 SCC G 
568 - referred to. 
Case Law Reference 
1999) 9 sec 568 
referred to 
Para 6 
H 
532 
SUPREME COURT REPORTS 
[2009] 2 S.C.R. 
A 
CIVILAPPELLATE JURISDICTION : Civil Appeal No 1089 
of 2009 
~~ -·"'-
From the final Judgement and Order dated 25.5.2007 of 
the High Court of Judicature for Rajasthan at Jaipur Bench in 
B 
Arbitration Application No. 31 of 2005. 
Saahila Lamba and Sudhir Nandrajog, for the Appellant. 
B. Sunita Rao, Sushma Suri and B. Krishna Prasad, for 
._ 
the Respondent. 
'._ 
c 
The Judgement of the Court was delivered by 
TARUN CHATTERJEE, J. 
1. Leave granted. 
D 
2. This appeal is directed against the judgment and order 
dated 25
1
h of May, 2007 passed by a-learned Judge of the High 
I'--
Court of Judicature for Rajasthan at Jaipur Bench in S.S. 
).... 
Arbitration Application No.31 of 2005 by which the learn
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